Growth rises in the East

If automobile sales are regarded globally as the engine of growth, India's next phase of economic growth is expected to come significantly from the hitherto neglected eastern region. Ask any manufacturer of passenger cars, SUVs, two and three-wheelers in the country, eastern states are substantially adding to their top and bottom lines. The latest automobile sales trend and report from the global consultancy firm, KPMG point at that direction. Over the years, Tamil Nadu, Maharashtra, Karnataka, Gujarat and Haryana have emerged as industrial hubs for automobile, cellphone and telecom equipment, drugs and pharmaceuticals, fertilisers and chemicals, textiles, garments and petroleum refining. Eastern India has long been ignored by the Delhi-based national political administration. There is no denying the fact that the latter is significantly influencing entrepreneurial decisions despite industrial delicensing and economic reform.

Yet, the East continues to feed the country with basic raw materials such as steel, coal, bauxite and aluminium and crude oil. The market wind is, however, changing. The region now contributes to over 25 per cent of leather production, 21.5 per cent of steel output and 44.1 per cent of mining and quarrying, 28.7 per cent of crude oil output and 10.4 per cent of chemicals and chemical products. The eastern states, including West Bengal, Odisha, Jharkhand, and Assam, are growing on their own strength. And, the region-wise automobiles sales data, growing air traffic, mid-budget foreign holiday tours, real estate development and the market of manufactured products, coming mostly from other regions, record eastern India's new robust growth trend. Not many economists at the national level, including those at NITI Aayog, seem to be sure about what is contributing to eastern India's slow-but-steady transformation from a low-income region to a middle-to-high income profile. Among the areas showing steady growth in the region are agriculture, traditional mine and mineral based industries, leather and jute products, and small and medium-scale manufacturing. They are leading the growth in disposable income, especially at the middle and lower levels. The latest KPMP survey recognises the trend and sees great growth prospect for the region, contributing substantially to the national GDP and income.

Interestingly, the eastern region's encouraging growth trend is shifting the focus of both the automobile and civil aviation industries towards the market in the region. According to the Society of Indian Automobile Manufacturers (SIAM), the sales growth of passenger cars, two-wheelers and sports utility vehicle (SUV) is almost twice as fast in the east as all of India. Passenger cars, two-wheelers and SUVs grew 14 per cent, 24.90 per cent, and 26.40 per cent, respectively, in the East in 2017-18. Assam recorded auto sales growth of 44 per cent from the year earlier. Bengal, Bihar, Odisha, Assam, Jharkhand, along with the seven north-eastern states, account for 15 per cent of total passenger vehicles, including two-wheelers, sold in India. In 2017-18, they accounted for a fourth of the total national incremental automobile sales. The eastern region's contribution to GDP is said to be about 17 per cent. However, KPMG feels that by the end of 2035, five of the eastern and north-eastern states — namely, Bengal, Bihar, Odisha, Assam and Jharkhand — are expected to account for a fourth of the nation's GDP, indicating substantial growth potential of the region. Maruti Suzuki, Hyundai, Tata Motors, Ford, VW, Bajaj Auto, Hero, TVS and Honda are all banking big on the growing automobile market in the eastern region.

The air traffic from the East, too, is growing like never before. The Airports Council International (ACI), a trade body that represents airports across the globe, has ranked Kolkata airport among the fastest growing in the world. ACI's World Airport Traffic Forecast predicts that India will represent the third largest aviation market in terms of passenger throughput after the US and China by 2020. Kolkata is all set to contribute a major share to the pie. In terms of the projected surge of air traffic in Indian cities, ACI has referred to it as 'awakening of the Bengal tiger'. If the regional connectivity scheme — Udan — takes off in a major way, it will further fuel the growth. Last year, Kolkata airport consistently recorded the highest growth in passenger traffic, outperforming other more fancied airports. While the traffic in Delhi and Mumbai grew around 14 per cent in 2017-18 over the previous year, air traffic from Kolkata grew at nearly 27 per cent. Hyderabad, Bengaluru and Chennai, in contrast, ended the year with growth rates of 19.6 per cent, 12.9 per cent and 10.5 per cent, respectively. Last year, Kolkata airport ended with passenger movement of close to 20 million. The air traffic growth even in smaller eastern India airports such as Bhubaneswar, Guwahati, Bagdogra and Ranchi was 30 per cent, 23 per cent, 48 per cent and 71 per cent, respectively. In terms of aircraft movement, Kolkata ranked among the country's top five airports, recording a total number of 148,802.

Domestic rating agency Smera Ratings agrees with the KPMG survey. According to Smera, the eastern states, led by West Bengal, have the potential to become a $3-trillion regional economy and account for over a quarter of the country's GDP by 2035 when the national GDP is likely to touch $11.34-trillion. The strategic location of Bengal makes it the potential business hub of the large regional economy comprising West Bengal, Odisha, Bihar, Jharkhand, Chhattisgarh, Assam and the seven North-Eastern states. These states are directly connected with the development of West Bengal since the state is the node for the entire eastern region. Bengal currently contributes 40 per cent of the region's GDP. The region's growing market size will hopefully induce the manufacturing sector to set up plants here, in due course, to further boost the economy and their sales.

(The views expressed are strictly personal)